Briefly: In our opinion speculative short positions (half) are justified from
the risk/reward perspective in gold, silver, and mining stocks.

Yesterday was another day during which the precious metals sector didn't really
decline (just a little) despite a move higher in the USD Index. Let's check
if the situation is bullish now (charts courtesy of http://stockcharts.com).

Starting with gold, we saw a small move lower, which might appear slightly
bullish given that the move materialized on low volume. This might have been
a suggestion that the move lower was not the true direction in which the market
was moving, but that was not really the case. The above is the case, in general,
for an opposite situation - if a given market moves higher on very small volume,
then it indicates that the buying power is drying up and that prices are about
to move lower. The situation is not symmetrical, because the price doesn't
stay at the same level when there are no buyers and no sellers - it declines.
In short, yesterday's price-volume action is only slightly bearish.

What's more interesting is that the first 2 days of this week are quite similar
to the first 2 days of the last week. We saw a sizable decline after this 2-day
action last week, so we can say that it's a quite bearish pattern on its own.
There was only 1 situation similar to the last 2 days, so the implications
are not strongly bearish, but the closeness of the situation and the level
of similarity make it bearish.

We can actually see a similar kind of 2-day pattern in the GDX ETF. Again,
the implications are rather bearish. The mining stock sector is close to the
March and April lows, and with each local high being lower than the previous
one, it seems that we might finally see a breakdown this month.

The US dollar moved higher in the past few days and it's about to take
out the important declining resistance line that stopped the previous rally
earlier this year. Once it moves above it, we are likely to see a strong
upswing, which could translate into a big decline on the precious metals
market. It seems quite likely in our view.

The USD Index moved higher and above the declining resistance line. It's now
more or less as much above it as it was during the previous attempt to move
lower. Since the previous move failed, it seems to us that traders are waiting
for some kind of confirmation that this breakout is a sustainable one. As such,
it might not have had a bullish impact on the precious metals market just yet.
It doesn't mean, however, that we won't see any in the coming days. There have
been cases when precious metals' reaction was simply delayed. This could still
be the case, and we are not yet convinced that metals are showing true strength
here.

The short-term USD Index chart reveals that there is one additional resistance
lvel that needs to be taken out before the USD can rally much higher - the
declining line based on the February and April highs. Once we have the USD
Index above this line and the breakout is confirmed, traders should become
convinced that the next move in the U.S. dollar is up, and that's when we might
see metals and miners finally respond to the USD Index' strength (by declining).

Summing up, the outlook for gold, silver, and mining stocks remains bearish,
but not extremely bearish, which means that we don't increase the size of the
short position just yet.

As always, we'll keep our subscribers updated should our views on the market
change. We will continue to send them our Gold & Silver Trading Alerts
on each trading day and we will send additional ones whenever appropriate.
If you'd like to receive them, please subscribe
today.

Przemyslaw Radomski, CFA (PR) is a precious metals investor and analyst who
takes advantage of the emotionality on the markets, and invites you to do
the same.

His company, Sunshine Profits, publishes analytical software that anyone can
use in order to get an accurate and unbiased view on the current situation.

Recognizing that predicting market behavior with 100% accuracy is a problem
that may never be solved, PR has changed the world of trading and investing
by enabling individuals to get easy access to the level of analysis that
was once available only to institutions.

High quality and profitability of analytical tools available at www.SunshineProfits.com are
results of time, thorough research and testing on PR's own capital.

PR believes that the greatest potential is currently in the precious metals
sector. For that reason it is his main point of interest to help you make
the most of that potential.

As a CFA charterholder, Przemyslaw Radomski shares the highest standards for
professional excellence and ethics for the ultimate benefit of society.

Disclaimer: All essays, research and information found above represent
analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates
only. As such, it may prove wrong and be a subject to change without notice.
Opinions and analyses were based on data available to authors of respective
essays at the time of writing. Although the information provided above is
based on careful research and sources that are believed to be accurate, Przemyslaw
Radomski, CFA and his associates do not guarantee the accuracy or thoroughness
of the data or information reported. The opinions published above are neither
an offer nor a recommendation to purchase or sell any securities. Mr. Radomski
is not a Registered Securities Advisor. By reading Przemyslaw Radomski's,
CFA reports you fully agree that he will not be held responsible or liable
for any decisions you make regarding any information provided in these reports.
Investing, trading and speculation in any financial markets may involve high
risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates
as well as members of their families may have a short or long position in
any securities, including those mentioned in any of the reports or essays,
and may make additional purchases and/or sales of those securities without
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